By Brett Arends
For the past couple of days I have watched in disbelief how everyone has piled onto Bank of America for announcing a $5 monthly fee for debit cards.
People are swamping the bank with hate. Outraged customers jammed its website.
The president of the United States denounced the move, which he said was exactly the kind of thing the new consumer watchdog is supposed to prevent – and denied banks have “an inherent right to get a certain amount of profit, if your customers are being mistreated.” On Tuesday, Treasury Secretary Tim Geithner and others piled on too.
“Get the heck of out of that bank,” thundered Senator Dick Durbin from the floor of the Senate on Monday afternoon. “Bank of America customers, vote with your feet.”
What a farce. If Bank of America customers don’t like paying a $5 a month for a Bank of America debit card, they have three options:
1. Move to another bank. There are thousands in America. I bank at a non-profit credit union. That way I know my banker has no incentive to try to scam me. They have no fat cat executive to support. They have no big marketing boondoggle to underwrite.
2. Junking your debit card, use cash instead. It’s that green paper stuff you may have seen from time to time, picture of a dead president on one side. Go into your bank or credit union and cash a check, and they will give you a bunch of it. You can go out and spend it. Merchants pretty much take it everywhere.
3. Get hysterical. Go ahead, burst into tears, scream, wail, inundate the bank with hate mail, picket your local branch, and wait for the president of the United States and a senator from Illinois to come rushing to your aid, brandishing salve and Band Aids.
It takes a lot to bring me out in support of the “banksters,” but this is absolutely moronic.
Companies charge for their products and services – last time I looked, anyway. I go to a restaurant, I get a bill. I go to a store, I buy something, I pay the cashier. Why should banks be any different?
Yes, Wall Street bankers have behaved outrageously in recent years. The most appalling sight recently has been that of overpaid CEOs at the Wall Street banks using their bailout money to, er, lobby Congress against reform.
But many of the worst offenders – the people who caused the financial crisis – have actually left. They’ve retired with their loot. Blaming the “corporations” and their stockholders – who have lost most of their money – is at this point misdirected.
Anyway, none of that has anything to do with debit card fees. The real problem with the banks in the past has been all the hidden fees they’ve used to nickel and dime you. The “mouseprint” (tiny disclosures) and “gotcha” terms and conditions. The “0% financing” that suddenly turns into 30% financing – backdated to the start – if you are late by 10 seconds with one payment. The way they have played game theory against their customers, trying to trick them. The usury.
That’s the stuff that the Dodd-Frank reforms, including the Durbin amendment, sought to curtail. And it’s working. The banks are now making more of their fees visible.
This $5 monthly charge from Bank of America, far from being a source of outrage, is actually a good thing.
That’s right: A good thing. They’re telling you up front, in plain English, how much a service (a debit card) is going to cost you.
You have the information you need to make an informed choice. Maybe you think the convenience is worth $5 a month. Maybe you think it isn’t. But it’s all there in plain sight.
If you don’t like it, move to another bank. You don’t need Dick Durbin’s advice.
As it is, Bank of America stock is in freefall. This year it has collapsed by more than half. Its bonds are trading as if default – bankruptcy – is a serious possibility. So it is absurd to attack them for “gouging” or “profiteering” or whatever other term we are using these days to describe a profit being made by someone other than ourselves. (When we make a profit, of course, it is just a reasonable rate of return.)
It is also worth noting that a glance through Dick Durbin’s personal financial disclosure shows he holds investments in Warren Buffett’s Berkshire Hathaway (BRK.B) and the Fairholme (FAIRX) mutual fund. Both are investors in Bank of America, and other bank stocks. In other words, those “profiteering” from the customers of Bank of America, and other banks, include plenty of shareholders, Sen. Durbin among them.
Brett Arends’ column appears in SmartMoney Magazine and also three times a week on MarketWatch.com